August 11, 2015
The draft of the ESM bailout saw the light earlier today after the conclusion of the final, technical talks between the Greek delegation and the creditors. From the 35 actions that are needed to pass through the Parliament the coming days, 20 of them are unclear on their essence and argumentation. Why is that?
From the first day since the capitulation of the Greek government, back on July 13, the Greek government was stating on every occasion that this deal is not the product of Greek proposals, but a mix of required measures that creditors have imposed to Athens. PM Tsipras is still insisting on cancelling the bailout in practice, meaning that the government, despite what has been agreed so far with creditors, is planning to implement its own program gradually and loosen up the tight conditions of the deal on the fiscal policy side. Even today, after the final talks, the Greek government issued a statement pointing out that the bailout “leaves space for growth“.
What we have observed on this big list of actions is that most of them fall exactly in what creditors were criticizing Greece for not doing so during the previous months; for not providing specific measures, with specific outcomes, specific timeframes, and a specific cost-benefit analysis. Creditors played that key for a long time and now that time is pressing, they are leaving big space for the Greek government to specify all these measures in order to impose on Syriza government the ownership of the bailout deal, address or strike back every possible argument that would call for the opposite. This is a big strategic maneuver by the creditors and it is about to strengthen their negotiation stance after insisting on snap elections in Greece. And why insisting on that?
The fist reason is that Eurozone leaders and the European Commission are well aware of the political developments in Greece and feel certain that PM Tsipras will call for snap elections. They also know that the upcoming voting in the Greek Parliament over the final deal is probably going to increase the number of Syriza MPs that will vote against and therefore deepen the rupture inside the party and the government. They also know that front opposition is extremely weak and incapable of supporting the deal without the support of Syriza – at least the biggest part of it. In this respect, they have pressed PM Tsipras to accept a set of tough measures that will ignite instability inside Syriza party, force Tsipras to call for early elections, and put in line the MPs and those supporting the deal after having cleared up with the rebels. Most pollsters give clear advantage to Syriza party, despite a big part of undecided voters. Even if this part of voters can possibly lower electoral power of Syriza, PM Tsipras popularity remains extremely high, despite the fact that he completely abandoned the political and economic program that brought himself and his party in power last January. Nonetheless, if the Greek PM wants to capitalize his support, it is now the time to go for it as social unrest in autumn can damage his popularity to block his plans.
The second reason for pressing PM Tsipras to call for elections is that there is another set of tough measures expected to enter into voting in the Greek Parliament by mid-October, as part of the bailout agreement. A clear win by Syriza party could leave Tsipras free of internal burdens and capable of legislating without the indispensable support of opposition parties. In this respect, the sooner PM Tsipras calls for elections, the easiest for creditors to impose another set of tough measures in October, late enough for the society and the market to start reacting against another deadlock for the Greek economy.
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